Tchenguiz plans to restructure £2bn debt pile

Vincent Tchenguiz

Vincent Tchenguiz, the property mogul arrested and released without charge last week as part of the investigation into Kaupthing, the failed Icelandic bank, has begun a process to restructure more than £2bn of debt backing his business.

The entrepreneur last month held a “beauty pageant” of investment banks to advise on plans to either restructure or refinance the debt, which was borrowed from banks including Lloyds, Royal Bank of Scotland, Allied Irish, Bayerische Landesbank, Citibank, Deutsche Bank and UBS. Lazard was among the leading names to advise on the process. It declined to comment.

Talking in the Mayfair offices raided by the police last week, Mr Tchenguiz said that the banks that backed the property business had been given reassurances following his arrest, which could have threatened to derail plans to restructure the loans.

He said that the decision by the court on Wednesday to allow him to pursue a civil claim against Kaupthing for more than £1bn in the UK courts had helped limit the reputational damage caused by the arrest.

“We have £2bn of senior debt with other banks, and a similar amount of swaps that would need to be covered. The other banks are asking questions, asking for reassurance. This judgment helps me balance my position. If not, what happens to that £2bn? This court case helps as it shows it’s not as black and white as meets the eye. All the banks in the £2bn are relying on our financial model.”

There have been defaults elsewhere in debt outstanding to the business, most recently the £125m loan from Bank of America Merrill Lynch that pushed Peverel property management into administration on Monday. There is also a £100m loan outstanding to Kaupthing, the bank whose 2008 collapse had prompted the investigation, which will mature within the month.

“Kaupthing is still in there,” he said. “They have £100m of £2bn, so its disproportionately small but very toxic. The £100m loan has not been given back. The maturity hasn’t finished but it will in a few weeks.”

Other joint venture partners, which include organisations such as the World Bank and sovereign vehicles from the Middle East and Africa, have also sought clarity over his business.

Mr Tchenguiz’s claim against Kaupthing centres on losses he said were incurred by the bank, causing the cross-default in the financial structures behind the businesses used as collateral for his loan and debt held by his brother, Robert, who was also arrested and released without charge with seven others last week.

The collateral included the offshore ownership of the Peverel operating and ground rents business, as well as an HBOS-funded ground rents business.

Robert Tchenguiz was one of the biggest borrowers from Kaupthing during the property boom, amassing debts of about £2bn.

Kaupthing intends to appeal against the court decision on Wednesday. It said that merits of the claims made were not considered, and if they were to be then “such judgement will not have direct impact in Iceland nor will it be binding on the Icelandic courts”.

Mr Tchenguiz would not comment directly on the investigation by the SFO, but said that he was upset about the approach taken and timing last week. “It was tough. I just woke up. I hadn’t had breakfast. I was there for a good few hours,” he said.